The 12 months’s largest new lease can also be the scariest to some market analysts. Whereas KPMG’s dedication to 450,000 sq. ft at Two Manhattan West is nice information for Brookfield Properties, it’s a unique story for Rudin Administration’s 345 Park Ave. and 560 Lexington Ave., and for SL Inexperienced’s 1350 Sixth Ave. — three Midtown towers the place KPMG will depart behind a complete of 800,000 sq. ft when it strikes out subsequent 12 months.
Pundits quoted elsewhere predicted gloomy instances forward for the Manhattan market the place a number of different corporations are additionally drastically chopping their ground area. HSBC Financial institution, for instance, is chopping its footprint right here by half when it strikes to Tishman Speyer’s Spiral subsequent 12 months.
Reflecting a modest countervailing pattern, legislation agency Freshfields Bruckhaus Deringer US signed for 180,000 sq. ft at Silverstein Property’s 3 World Commerce Heart — an growth from its present 110,000 sq. ft at BXP’s 601 Lexington Ave.
However though KPMG is giving up more room than Freshfields is including, the strikes have one thing in widespread that bodes properly for Manhattan’s future regardless of area givebacks pushed partly by work-from-home.
Many high dealmakers argue that the bigger concern than how a lot area is being absorbed or deserted is the form of area that’s more and more in demand.
Which means new area, in fact — and the newer, the higher. It’s excellent news for builders and for the development business, and for the town’s tax base which has already been harm by the decline in industrial values.
Two Manhattan West and Three World Commerce belong to the marquee league of towers that handily outclass towers that opened as not too long ago as 20 years in the past. Their success in luring top-tier tenants echoes the scenario at Associated’s Hudson Yards, Silverstein’s and the Durst Group’s different World Commerce Heart Buildings, Tishman Speyer’s Spiral, SL Inexperienced’s One Vanderbilt and L&L Holding Firm’s 425 Park Avenue.
All managed to fill most or all of their costly flooring. Sturdy early leasing at Olayan Group’s 550 Madison Ave. and Brookfield’s 660, each of which had been so utterly redesigned as to make them successfully new, suggests they’re on their option to full occupancy as properly.
CBRE tristate CEO Mary Ann Tighe, who was a part of Silverstein’s leasing workforce at Three World Commerce and is the chief leasing agent for 550 Madison, argued that the market is way too giant and sophisticated to leap to facile generalizations.
“The fact of the scenario is that it isn’t one resolution suits all. It’s so nuanced and specific to each firm,” she mentioned.
“The one factor that emerges from all [the recent lease signings] is that new buildings and older ones that had been gut-renovated match the profile” of the place tenants need to go, whether or not they’re rising or shrinking.
Tighe made the excellence between “twenty first century buildings” which might already be 23 years outdated by the point new leases take impact and “these constructed within the final decade.”
JLL tristate president and chairman Peter Riguardi, who wasn’t concerned in both transaction, mentioned that downsizing corporations are “doing it strategically to be in higher buildings. They’re extra enticing to expertise and extra conducive to bringing individuals again to workplaces.”
Utilizing much less area lets corporations get pleasure from the benefits of new building — comparable to higher ground plates, extra superior digital and mechanical infrastructure and in-building facilities — “with out rising their common yearly occupancy value.”
KPMG communications director W. Scott Horne mentioned of his agency’s transfer, “Our actual property technique is centered on creating workplaces that embody our tradition, attracting and retaining the very best expertise and redefining the office expertise.”
Horne mentioned, “We short-listed buildings that met these standards, and Two Manhattan West emerged the unanimous alternative.”
However what about obsolescent, older buildings that may solely be improved to a sure extent?
To not reduce the challenges their homeowners face, however they’re extra simply transformed to residential makes use of than fashionable ones are. And in any occasion, work-from-home may not be as everlasting and common because it now appears.
As The Publish first reported, JP Morgan Chase CEO Jamie Dimon is quietly however forcefully cracking down on distant work. He has a brand new headquarters skyscraper going up at 270 Park Avenue — and he doesn’t intend to make use of it for Zoom conferences.